A Study On The Evolution Of Consumption And Demonstration Effect Between Urban And Rural Residents

Recently,investment and export have been successively restricted, so that the expansion of domestic consumption has become the main driving force of our economic growth especially since the U.S. financial crisis. Previous studies believe that the markets of urban and rural areas are independent of each other, so analyses also neglect their connection. However, with the development of economic and the growth of resident real income, the dual pattern of economic between urban and rural area is broken. And the consumption characteristics of rural area is more and more influenced by the urban area. This dissertation will investigate the evolution path of the consumption model for both urban and rural areas by qualitative analysis and quantitative analysis, so as to explore the detailed demonstration effect of urban area to rural area, which is of great importance for the efforts to guide residents reasonable consumption, narrow the consumption gap and promote the integration of urban and rural construction.There are five chapters. The first is introduction. It mainly includes backwards, significance, innovation and article framework. The second is literature review. The third is analysis on the evolution and difference of Chinese consumption between urban and rural areas. In this part, firstly the writer compares consumption level and consumption structure in urban and rural areas. Then group the urban and rural residents according to the level of income, and divide ruban consumption into two phases to contrast with rural arear respectively. The purpose of doing so is to prove the presence of demonstration effect without considering income factor. The fourth is analysis on rural consumption function including demonstration effect of urban area to rural area. Based on the different proportion of consumption-to-income between urban and rural areas, a demonstration effect model was established. Moreover, this chapter does empircal test using statistics from1992to2011, and the result proves that there are demonstration effect of urban area to rural area in the consumption of housing, transportation and communication, culture, education and recreation. Final, policies and suggestions for rational consumption of rural residents.The innovation of this paper lies in the introduction of demonstration effect of urban area to rural area, and using the consumption-to-income ratio of different goods and services to measure its impact strength, which is important for optimal selection of consumption path.